LAG IN BANK SHARES

Nelson Evening Mail, Volume LXVI, 2 May 1935, Page 7

LAG IN BANK SHARES

LEVELS BELOW LAST YEAR MODERATE PROFITS EARNED Tlie lag in the recovery of bank shares to normal levels is one of the outstanding features of the investment market on New Zealand Stock Exchanges (states the “N.Z. Herald”). With the exception of Bank of New Zealands, which have been subjected to special influences, all shares are quoted at rates below those ruling at this time last year. The decline • is about 10 per cent, to 15 per cent. On the whole, one has to go back two years to find equivalent prices. Towards the end of 1933 there was some uplift, due to an increase in tlie rate of dividend declared by the Union Bank, which was followed by a slightly higher dividend for tlie Bank of Australasia. However, since that time dividends have shown no advance, and hope which inspired a revival in levels eavlv in 1934 has faded.

Banking profits, although showing moderate improvement, lack the buoyant rise necessary to inspire confidence among investors. Recovery to predepression figures js proving a slow process, and experience indicates that banking profits will follow revival iu trade and not lead it. The latest accounts issued, those. ol tlie Bank of Australasia, throw light on the position. Deposits for the year ended October, 1934, show a rise of £1,750,000, ot which £700,000 is accounted for in interdst-bcaring deposits. Against this, advances have fallen and the proportion of loans to deposits, 78.4 per cent., is the lowest for several years. Depositors’ funds have been forced into less remunerative channels, such as Government securities, which item is increased by over £1,000,000. The fact that banks have been “under fire” politically in recent years has had a disturbing effect, on tlie market. Tlie system was closely examined l,v the Monetary Commission in New Zealand, and in Australia it has been decided to form a Royal Commission to investigate banking. Although the “Big Five ’ hanks in Britain are still maintaining high dividens, a comparison with the Australian and New Zealand hanks is hardly possible owing to the far wider range of investment offering in England.